Questions and answers about coronavirus and the UK economy

Attitudes, media & governance

Watch a conversation between Jagjit Chadha, Director of NIESR and a lead editor of the Economics Observatory, and Mervyn King, former Governor of the Bank of England, on radical uncertainty, coronavirus, and economic policy:

#economicsfest: What has coronavirus taught us about radical uncertainty?

Covid-19 has revealed the importance of access to key information when faced with an economic and public health shock of such magnitude. Understanding the role of uncertainty and the limitations of theory is critical in designing policies to navigate the challenges ahead.

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#economicsfest: Is Big Government back?

Lockdown measures around the world show that governments can still make deep interventions in the economy. As the costs of mitigation policies mount, it looks likely that the state will need to provide large-scale fiscal support for months to come.

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Does rationing essential goods help to prevent panic buying and shortages?

Reports of panic buying before lockdown in March led some supermarkets to limit how much shoppers could buy on each transaction. But since higher demand was driven mainly by people buying more frequently, such limits are unlikely to prevent future shortages of essential goods.

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Data: US voters' election expectations

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The pound-of-flesh fallacy: do lockdowns simply postpone the pain of Covid-19?

There is a common belief that whatever measures are taken to reduce the spread of coronavirus, they are unlikely to reduce the ultimate death toll. But well-designed protective policies could save many lives, as well as buying time for pharmaceutical innovations to counter Covid-19.

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How can public health messages promote compliance with protective measures?

Public buy-in to Covid-19 policies like mask wearing and quarantining remains essential. More effective government communication would frame the potential outcomes from compliance or non-compliance – and target different parts of society with tailored messages.

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How can authorities control coronavirus without killing the economy?

Severe restrictions introduced in response to Covid-19 have disrupted economic activity, especially retail, services and hospitality. Evidence from local lockdowns suggests that it is possible to control the virus without resorting to measures that damage the economy.

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Valuing statistical lives: how should such metrics inform pandemic policy-making?

Governments make policy decisions involving trade-offs between different outcomes that vary in their mortality risks. These trade-offs have become more pronounced with Covid-19, which also highlights limitations of some of the metrics used, such as the value of a statistical life.

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Externalities: why do we need coordinated public action in the pandemic?

With infectious diseases like Covid-19, how one person behaves necessarily affects other people’s wellbeing – there are what economists call ‘externalities’. To achieve good overall outcomes for society, it is not enough to rely on individuals’ incentives to protect themselves.

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How can we know which policies to fight Covid-19 actually work?

Policy-makers, scientists and the public are engaged in heated debates about the right responses to Covid-19. In making decisions on such matters as school re-opening or mandatory mask wearing, we need a way to measure both the benefits and the economic and psychological costs.

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Do people change their behaviour when face masks are mandatory?

Although face masks reduce the chance of transmission of coronavirus, some governments have been reluctant to make their use mandatory in public places. People’s behaviour is likely to change when wearing masks, but it is uncertain whether the risk of infections will rise or fall.

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What role does emotion play in our responses to coronavirus?

How we feel has a strong influence on what we do – and perhaps even more so during a crisis like the Covid-19 pandemic. An understanding of how emotions function is crucial if we are to guide more effective policy-making. In particular, we must stay alert to the dangers of fear.

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Can behavioural economics help with the enforcement of social distancing?

People’s compliance with lockdown, social distancing instructions and other protective measures are influenced by their beliefs, expectations and concern for others. Insights from behavioural economics can help in the design of effective policies.

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Who complies with social distancing measures in the pandemic?

A key policy response to coronavirus has been the enforcement of social distancing rules, including lockdown. Economic research shows that people’s reactions to restrictions are influenced by differences in social capital, trust in government and political beliefs.

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What will the shape of the recovery tell us about the best policy response?

As lockdown restrictions ease, economic activity in the UK is beginning to recover. Will the economy bounce back to where it was before the onset of the Covid-19 crisis? Or will we be left dealing with the economic fallout of coronavirus for the foreseeable future?

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How will coronavirus and the recession affect UK immigration?

Recessions have an impact on net migration flows, the labour market outcomes of migrants and the effects of migrants on native outcomes. Migrant workers face particular challenges in the Covid-19 crisis given the industries and occupations in which many of them are employed.

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Why is Germany's Covid-19 fatality rate comparatively low?

Coronavirus deaths per one million people in Germany are much lower than in France, Italy, Spain and the UK. Explanations include earlier protective measures; an economy better able to accommodate remote work; a well-resourced healthcare system; and high levels of public trust in government.

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Has coronavirus made anyone better off?

Does anybody prefer the state of the world now to how it would be with no pandemic? It seems clear that the severe restrictions on daily life and the risk of getting Covid-19 far outweigh any possible gains, except for a very few people.

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Is hate crime rising during the Covid-19 crisis?

Pandemics and severe recessions are the kind of threatening events that can trigger racist and discriminatory behaviour, often as a result of negative media portrayals. Immigrants and ethnic minorities could experience a more hostile environment during the Covid-19 crisis.

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Can recovery from Covid-19 help transition to a zero-carbon economy?

There are many calls to use recovery from the Covid-19 recession to assist with the ‘climate transition’ to an economy in which emissions are no longer causing global temperatures to rise. Should policy on climate change and the aspiration for ‘zero-carbon’ be modified?

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How much will lifting lockdown start to reverse the UK’s economic slump?

Preliminary data suggest that the dramatic fall in UK consumer spending preceded the introduction of lockdown and social distancing in March. Will this fall in consumption reverse as lockdown restrictions ease – or persist because of subdued consumer confidence?

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What are the long-run economic consequences of pandemics?

Historical epidemics provide only a loose guide to the likely economic impact of coronavirus. What history does suggest is that when they occur in societies already under stress, they can provoke wide-ranging and long-term changes in attitudes, culture and institutions.

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How should we allocate limited capacity for coronavirus testing?

Re-opening the economy while minimising infections requires testing – but capacity is limited. To target testing well, policy-makers must consider the types, quality and timing of tests, the costs of errors and the risks of infection across different social groups.

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Risk in the time of Covid-19: what do we know and not know?

Coronavirus has exposed the world’s population to an extreme degree of uncertainty in all dimensions of life. How does this unprecedented global event influence our risk-taking – and how can we measure it reliably?

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What are the lessons for today from running a wartime economy?

The world continues to experience episodes that remind us of the profound disruptions of twentieth-century wartime. But how far does the war analogy stretch? Covid-19 has been able to disrupt our economy at a speed that no foreign enemy has ever matched.

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What is the likely future role of the state in the UK economy?

Economic distress caused by the pandemic, the lockdown and the recession have required a big increase in public spending. How has the crisis affected the size of the state and the effectiveness of government policy?

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Do we make informed decisions when sharing our personal data?

The use of digital technologies to fight Covid-19 raises questions about public access to private data. It also shines a light on how people make economic decisions with regards to their personal data and information.

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What will be the impact of Covid-19 on public attitudes to immigration?

The coronavirus pandemic is changing the UK immigration debate, with tensions between requirements for stricter controls and greater recognition of key workers, many of whom are migrants. How will the crisis affect public attitudes to immigration?

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Funded by

UKRI Economic and Social Research Council
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